June 21, 2022
Securian has released its new Secure Care III cash indemnity hybrid long term care policy this past quarter. As most of you that have been following my blog for awhile know, the original Securian SecureCare policy was one of the all-time best long term care policies. It epitomized the Live, Die or Quit mantra of hybrid long term care insurance.
Live: Policyholders received 100% cash indemnity long term care benefits if care is needed
Die: Policyholders received 100% of the premium back as a death benefit if care was not needed
Quit: Policyholders received 100% of a return of their premium outlay back (vested after 5 years) if they changed their mind.
And of course the original SecureCare policy was generally priced exceptionally well, often beneath market as a single pay design.
Well, times have certainly changed and many long term care policies have been repriced over the past 5 years. It was inevitable that the Securian SecureCare policy would also be repriced to be more in-line with current market long term care pricing.
The good news is that the Securian SecureCare III policy is still 100% cash indemnity. With cash indemnity models, proof of loss forms are not required to be submitted by you on a monthly basis for you to receive 100% of your maximum monthly long term care benefit. With home care benefits, all informal care received by you is covered, including care by your family.
The biggest change within the current SecureCare III pricing model is with the "Quit" component of the Live, Die or Quit mantra.
Whereas the original SecureCare policy had the 100% Vested Return of Premium benefit built-in, the new SecureCare III policy now gives policyholders the choice to enhance the Return of Premium benefit to the 100% level for additional premium, generally 20 -25% more. So, you can still design the new SecureCare III plan like the old plan however I can't see many people repositioning 25% more premium for this option to receive all of your money back should you cancel in the future. So, for all intents and purposes the current SecureCare III policy will almost always be written with a Return of Premium benefit of less than 100% if you do change your mind and want to cancel your coverage in the future.
Anyway, this has been the trend of the entire long term care insurance arena, not just with Securian. The 100% Return of Premium benefit if you change your mind is basically history for the most part with all major underwriters at current pricing.
So now the hybrid long term care policy mantra might as well be Live, Die and 70% Quit.
Yes, I know the story is nobody ever cancels their long term care policy, but still I liked the old Securian 100% Return of Premium idea. It was there for you just in case.
To a lesser extent the new SecureCare III policy also might not return 100% of your premium paid as a death benefit. With not all, but with some applicants, your death benefit with the SecureCare III policy might be less than your total premiums paid. Your death benefit amount will depend upon your age, gender, couples status, and inflation protection factor elected.
In any event, here we are, so let's take a deep dive into the new Securian SecureCare III policy
Securian SecureCare III Features and Benefits
Policy type: Whole Life policy with cash indemnity (7702B) benefits
Issue ages: 40 - 75. Policy must be paid-up by age 80
Premium schedules: Single pay, 5 pay, 7 pay, 10 pay, or 15 pay
Multi pay premium options: Policyowner may pay larger lump sum in year 1 with fixed level premiums thereafter. All premium modes available (quarterly, semi-annual, monthly EFT) with no extra cost.
Return of Premium options: Vesting, 75% or LTC Boost
- Vesting: 100% premium refund if policy is cancelled, subject to vesting schedule
- 75%: offers a 75% Return of Premium benefit at any time if you cancel your policy policy
- LTC Boost - provides a Return of Premium equal to the policy's guaranteed cash value if you cancel. Your LTC benefits will be maximized with this option
Minimum face amount: $50,000
Maximum face amount: $500,000
LTC Benefit Payment: 100% cash indemnity, entire policy, acceleration of specified amount and extension of LTC Agreement
Benefit period options: 4 - 8 years
Inflation protection options: 3% simple, 3% compound, 5% simple, 5% compound. Benefits increase annually, even while on claim.
Reduced paid-up benefits: Should you fail to complete the premium payment schedule, your SecureCare III policy will provide a reduced paid-up nonforfeiture benefit based upon premiums paid.
Guaranteed Minimum death benefit: 10% of the specified amount or $10,000 whichever is less.
Elimination period: 90 calendar days from the date you are certified as being chronically ill from a licensed health care provider. Home modifications and caregiver training are accessible immediately without being subject to the elimination period.
International coverage: 100% of your total LTC benefit amount is available for use internationally however only up to 50% of your monthly maximum benefit. Upon return to the U.S. you may receive 100% of your monthly maximum LTC benefit.
Tax deductibility: LTC premiums are separately identifiable. Individuals and businesses may be able to deduct a portion of the LTC premiums from their income taxes.
Streamlined underwriting: No labs or bloodwork required. Securian will order medial records when necessary to evaluate your application.
In reviewing the current features and benefits, aside from the return of premium changes already noted above the other primary changes revolve around the LTC benefit period options and the enhanced premium payment flexibility.
One primary change with the new SecureCare III policy is that today you can efficiently elect longer LTC benefit periods of 7 years or 8 years if desired.
The original SecureCare policy was generally only written with either a 4 year or a 6 year benefit period (almost always).
So now extended LTC benefit period coverage of 7 years or 8 years can be purchased.
SecureCare III will also now be flexible in accepting larger lump sum premium premiums as a down payment on the installment plan designs, helping to decrease scheduled premium payments.
The prior SecureCare policy was inflexible with its installment payment options.
This being said, the core benefit of the SecureCare III policy is still its 100% cash indemnity payout structure.
Securian SecureCare III - The Power of Cash Indemnity LTC Benefit Payments
One of the most important things to understand about your long term care insurance policy is how it will pay your benefits to you once you initiate your claim.
There are two types of benefit payment methods: 1) Reimbursement and 2) Cash Indemnity.
The reimbursement policy is the most common method. Reimbursement policies will cover your specific expenses for long term care services that qualify under your policy, not to exceed your monthly maximum cap.
With reimbursement policies, bills and receipts must be submitted to the insurance company on a monthly basis. (The bills generally may be submitted directly by your care provider to the claims department)
In contrast, cash indemnity policies will pay 100% of your maximum monthly benefit to you with no restrictions, or need to submit monthly bills or receipts. Once your claim is approved, you may use your monthly cash benefit as you wish. Anyone may provide your care to you, including your family. Any unused monthly benefits by you can be saved in your personal checking or savings account for use in the future. In this way, your policy's value can be fully leveraged and not leave any benefit amount unused.
100% Cash Indemnity policies are offered only through Securian, Nationwide and Brighthouse.
Reimbursement policies are more commonly provided through leading underwriters such as OneAmerica, Lincoln, Global Atlantic, Mutual of Omaha, Thrivent, National Guardian, Northwestern, NY Life.
So, I am pleased the core benefit of the Securian SecureCare policy remains in SecureCare III.
The biggest change however is within the pricing of the Return of Premium benefit. The prior policy always included a 100% vested Return of Premium benefit. Today, however, SecureCare III offers 3 Return of Premium options at different price points.
Let's review these (3) different Return of Premium options so you can gain a sense as to which option you might prefer.
Securian SecureCare III Return of Premium Options
Securian now offers 3 Return of Premium options for you to choose between.
1) Vesting: if your priority is maintaining the full value of your original asset. 100% Return of Premium
2) 75%: if your priority is enhanced LTC protection and the ability to get most of your money back if you need it, 75%
3) LTC Boost: if your priority is getting the most LTC protection for the least amount of money. Return of Premium will be equal to guaranteed cash value.
Let's review an example so you can see the cost of these 3 options for the same level of benefits.
Let's look at a single pay design for a married couple, Age 58, benefits of $5000 month, 6 year benefit period, 3% compound inflation protection.
Single Pay Premiums
58 yr old male $98,966 (par)
58 yr old female $115,105 (par)
58 yr old male $103,858 (+5% more premium than LTC Boost))
58 yr old female $122,046 (+6% more premium than LTC Boost)
58 yr old male $118,531 (20% more than LTC Boost)
58 yr old female $142,871 (24% more than LTC boost)
The Return of Premium values with LTC Boost are generally in the 50% - 65% range in the initial 10 years of policy ownership. I realize it is not a huge amount of premium to move to the 75% Return of Premium model, however I have to believe almost everyone will apply for the LTC Boost model. I just don't believe there will be much traction in applicants to enhance the Return of Premium values from ~55% or 60% to 75% for more additional premium. If you intend to keep the policy, you are simply throwing away premium. And if you are one of the rare policyholders that will need to cancel your coverage in the future, you will still be saddled with a big surrender penalty.
If you really have concerns that you may need or want to cancel your coverage in the future, you probably should just entertain the 100% Vested Return of Premium model for the additional 20% -$24% premium. At least should you not ever find yourself in the position where you need or want to cancel your coverage, your heirs will receive your additional premium back as death benefit.
This said, I believe my client base will look squarely at the LTC Boost options to maximize their long term care payouts for the least amount of premium outlay.
So, with this in mind let's find out how the new Securian SecureCare III policy compares with other hybrid long term care plans for maximum long term care benefits.
Should You Buy The Securian SecureCare III Policy?
Since its introduction in 2017, the Securian SecureCare policy was often a slam dunk buying decision for many of my clients seeking an individual policy. Together with the joint life OneAmerica Asset Care policy that offers lifetime Unlimited LTC benefits, the old SecureCare policy was on a real short list of strong value plays in the long term care insurance arena.
Today, however, with its current price changes the question becomes: Is the Securian SecureCare III policy still a slam dunk purchase?
Let's take a look at the new Securian SecureCare III positioning within the current long term care insurance marketplace so you can determine if it's current pricing might be a fit for you when compared to alternative long term care insurance policies.
For your analysis today we will only look at single pay options. Multi-pay options are available with Securian, as well as the other underwriters for additional premium.
To review apples-to-apples pricing we will examine benefits for men and women ages 45, 55, and 65 with a single pay option of $100,000 per person. We will use 6 year benefit periods and 3% compound inflation protection, (or 5% compound inflation if reasonably available).
The main competitor individual policies to Securian SecureCare III with these designs are the Lincoln Moneyguard Fixed Advantage policy and the Nationwide CareMatters II policy.
The OneAmerica joint life Asset Care policy with its Lifetime Unlimited long term care benefits is also an exceptional policy to consider, however the OneAmerica joint life unlimited LTC policy is the orange to these 3 individual limited benefit period policy apples.
I do not want to confuse you with a mixed fruit comparison just yet.
So for now let's compare individual policy offerings with Securian, Nationwide and Lincoln.
Nationwide, like Securian, is a 100% cash indemnity policy. Lincoln is a reimbursement policy, but it does include a small amount of cash indemnity within its new Moneyguard Fixed Advantage policy. (50%, and only until the specified amount of life insurance has been reduced to zero)
Married male age 45 LTC benefits $100,000 single pay
|Initial Monthly LTC||Age 80 Monthly LTC||Age 80 Total|
|Securian 3%||$6487 mo.||$18,253 mo.||$1,416,873|
|Nationwide 3%||$6140 mo.||$17,278 mo.||$1,341,125|
|Lincoln 3%||$5867 mo.||$16,509 mo.||$1,281,411|
|Nationwide 5%||$4163 mo.||$22,965 mo.||$1,874,434|
Interesting results for married men age 45. Securian still looks very good relatively with the 3% compound inflation factor. Your best value, however, if you are a male age 45 will probably be the Nationwide CareMatters II policy using 5% compound inflation protection instead of the more commonly available 3% compound. If you are of the belief that your need for care will be later rather than sooner, you will maximize your coverage when you are in your 70's and 80's with the Nationwide CareMatters II 5% compounded inflation protection option.
I bought my LTC policy at age 46, and I elected 5% compound in my plan. Otherwise, the Securian SecureCare policy is still a very good value.
Married female age 45 LTC benefits $100,000 single pay
|Initial Monthly LTC||Age 80 Monthly LTC||Age 80 Total|
|Securian 3%||$5553 mo.||$15626 mo.||$1,212,911|
|Nationwide 3%||$5596 mo.||$15745 mo.||$1,222,169|
|Lincoln 3%||$4920 mo.||$13844 mo.||$1,074,535|
|Nationwide 5%||$3059 mo.||$16873 mo.||$1,377,260|
Well, the Securian and the Nationwide numbers here are extremely close if you are a married female age 45. Although it is not a clearcut easy decision for you as with the 45 year old male above, if you are a married female age 45, you could consider the 5% compound inflation protection with Nationwide here, as well. Whether you elect 3% or 5% compound, it appears as if Nationwide will slightly edge out the Securian policy for 45 year old females. Nationwide also retroactively pays 3 months of benefits when you satisfy its 90 day elimination period, while Securian does not. And Nationwide CareMatters II has the highest Guaranteed Minimum Death Benefits with all of these policies if LTC benefits are used. So, all tiebreakers for you will go to Nationwide over Securian.
Securian SecureCare III is reasonable, however. Nationwide CareMatters II will be my first choice today for individual policies for 45 year old married men or women, though.
My biggest takeaway however for you in examining your pricing above (moreso than in deciding whether Nationwide or Securian wins) is Lincoln Moneyguard Fixed Advantage loses here for you.
Married male age 55 LTC benefits $100,000 single pay
|Initial Monthly LTC||Age 80 Monthly LTC||Age 80 Total|
|Securian 3%||$5358 mo.||$11,219 mo.||$870,848|
|Nationwide 3%||$5015 mo.||$10,501 mo.||$815,075|
|Lincoln 3%||$5192 mo.||$10,871 mo.||$843,823|
|Nationwide 5%||$3742 mo.||$12,671 mo.||$1,034,219|
In reviewing the 55 year old married male benefits for you, Securian still looks strong with the 3% compound inflation factor election. Your best option taking the long view might still be the Nationwide CareMatters II policy with the 5% compound inflation option.
Getting closer however, and not as easy as a decision for you, though.
Here are the complete illustrations for the Securian policy using 3% compound inflation and the Nationwide policy using 5% compound inflation. Your benefits will be stronger with Nationwide if your claim occurs at age 73 or later. Reasonable to conclude this is likely to happen should you need long term care.
Let's examine 55 year old married female pricing
Married female age 55 LTC benefits $100,000 single pay
|Initial Monthly LTC||Age 80 Monthly LTC||Age 80 Total|
|Securian 3%||$4593 mo.||$9617 mo.||$746,546|
|Nationwide 3%||$4412 mo.||$9237 mo.||$716,979|
|Lincoln 3%||$4550 mo.||$9527 mo.||$739,510|
Once again, the Securian Secure Care III pricing and benefits for 55 year old married females and benefits looks very good, and is market competitive with the highest initial monthly LTC benefit for you. Certainly, if you are a 55 year old married female the Securian SecureCare III policy will squarely be in your discussion.
Married male age 65 LTC benefits $100,000 single pay
|Initial Monthly LTC||Age 80 Monthly LTC||Age 80 Total|
|Securian 3%||$4164 mo.||$6487 mo.||$503,576|
|Nationwide 3%||$4021 mo.||$5265 mo.||$486,262|
|Lincoln 3%||$4355 mo.||$6785 mo||$526,629|
|Nationwide 5%||$3350 mo.||$6965 mo.||$568,510|
In reviewing the above numbers for you if you are a 65 year old married male, your very best option is most likely the Nationwide CareMatters II policy using its 5% compound inflation protection option. Lincoln Moneyguard Fixed Advantage also has strong benefits, however if your claim is after age 76-77 ++ , the Nationwide CareMatters II will provide the stronger LTC benefits to you with the flexibility of the cash indemnity benefits, as well.
Although the Lincoln Moneygaurd Fixed Advantage and the Securian SecureCare III policies would each be reasonable solutions here, it appears that for all married men today of all ages, the Nationwide CareMatters II policy using 5% compound inflation protection will ultimately be your best individual policy solution today in 2022 if we are evaluating these policies in a critical manner.
Finally, let's take a look at 65 year old married female pricing to see the long term care benefits comparisons.
Married female age 65 LTC benefits $100,000 single pay
|Initial Monthly LTC||Age 80 LTC||Age 80 Total||Life Ins.|
|Securian 3%||$3543 mo.||$5519 mo.||$428,398||$85,020|
|Nationwide 3%||$3394 mo.||$5287 mo||$410,409||$100,000|
|Lincoln 3%||$3395 mo.||$5289 mo.||$410,541||$100,000|
The numbers are very close here. You will see that the Securian long term care benefits will look good for you if you are a 65 year old married female, however at your age, Securian is providing you with a life insurance benefit that is less than your premium that is deposited. Here, with a premium deposit of $100,000, your life insurance benefit with Securian SecureCare III if care is not needed by you is $85,020. With either Nationwide or Lincoln your life insurance benefit will be $100,000. Additionally, Nationwide and Lincoln will cover the cost of your care for the initial 90 day elimination period, while Securian will not. If you do not need care, or if you ultimately need care for less than 70 months, either the Nationwide CareMatters II or the Lincoln Moneyguard Fixed Advantage policy will best maximize your value for you due to its providing you with 3 additional months of long term care benefits upfront.
So while it seems initially Securian is your best option here, there are other factors at play with life insurance payouts if care isn't needed, and elimination period benefits that you should keep in consideration.
Here are the Securian, Nationwide and Lincoln illustrations for married 65 year old females.
Securian SecureCare III Policy Review Conclusions
Well, as you can see from the numbers above the new Securian SecureCare III policy is still a reasonably priced LTC policy option for you to consider, especially if it is important for you to have the flexibility of the cash indemnity benefit payout to allow your family to possibly provide care for you, if needed. In comparing the cash indemnity option available through Nationwide, you might find that the Nationwide CareMatters II indemnity policy today possibly edges out the Securian SecureCare III policy for you, especially if you are a male and you find value in the pricing of the 5% compound inflation factor with Nationwide.
Of the major underwriters, Securian Secure Care III will have the most stringent elimination period in its contract. The Lincoln Moneyguard Fixed Advantage and OneAmerica Asset Care policies will pay benefits on day 1 for home care. Nationwide CareMatters II will retroactively pay benefits from day 1 once you have satisfied the 90 day elimination period. Securian SecureCare III is the only contract that will not pay any benefits to you for the initial 90 days once you are certified as being chronically ill.
One advantage of the Securian SecureCare III policy is with its international coverage. If you plan to retire overseas the Securian policy is only one of two contracts (Brighthouse is the other) that will make available your entire policy benefit amount overseas (albeit at a reduced 50% monthly payout).
Ultimately, however, when the pricing is so very close with all of these contracts the most important issue becomes the underwriting of your application. If you are exceptionally healthy, the underwriting will not matter of course. You are a free agent and will be able to select any policy that you want. However, most applicants do have some health history to review. And often we might find that underwriting can result in different outcomes with these different companies.
Securian is generally a conservative underwriter. Securian will order medical records when necessary to evaluate an application. (Nationwide is also similarly conservative if you are curious)
This is where the most important factor for you is ultimately working with the most experienced long term care insurance agent that you can find.
Yes, I will raise my hand here. I have 25 years of long term care insurance experience with an insanely high volume of production. Over the past 10 years I have placed more hybrid long term care insurance premium in-force than any agent in the United States. My sole objective is to work closely and directly with all of the leading underwriters to produce a favorable outcome for you.
Should you wish to receive personalized advice and customized illustrations for all of the top-rated insurance companies please call me directly at (800) 891-5824. Or if you prefer to schedule a call please use the link below to my online calendar.
Thank you for reading my blog.
Jack Lenenberg, J.D.